Tax implications of gifting

chocolady

My friend's mum is thinking of gifting a few thousand pounds to her son. Her estate does not come to more than the inheritance tax limit but she is worried about the tax implications on her son. Could anyone tell me if her son would have to pay tax on the gift? I believe he is a taxpayer.

monkeyspanner

Her son will not be liable for tax on the gift and as long as her estate is under the IHT limit there will be no tax payable.

There is another matter that mey be relevant. If your friend may need residential care in the foreseeable future and the council could be liable to assist with funding after the gift(only relevant if assets after the gift are under around £23000), then the gift could be viewed as a deliberate deprivation of assets.

pollypenny

Everyone can give £3,000 a year without any tax problems. This is double in year of marriage.

Biggles

pollypenny wrote: »

Everyone can give £3,000 a year without any tax problems. This is double in year of marriage.

That's without any Inheritance Tax problems. For anyone not liable to IHT, there are no tax problems however large the amount.

However, the other possible problem mentioned by MonkeySpanner could apply whether the gift is less than £3,000 or not.

pollypenny

Not quite. I understood the recipient of the gift would not have any tax problem either.

Is that right?

Errata

pollypenny wrote: »

Not quite. I understood the recipient of the gift would not have any tax problem either.

Is that right?

Can't see why not. If my stepdad gave me £3k for my birthday (fat chance) to spend on a nice holiday I can't think why I'd have to pay tax on it.

Biggles

pollypenny wrote: »

Not quite. I understood the recipient of the gift would not have any tax problem either.

Is that right?

The £3k which you mentioned relates only to the IHT liability of the donor, not to the recipient in any way.

There is no other tax liability to either.